The dollar retreated on Friday, dragged by lower U.S. Treasury yields after a spike in weekly jobless claims raised traders' hopes that a peak in U.S. interest rates was near, as focus turned to the upcoming week packed with central bank meetings.

The U.S. trade deficit widened by the most in eight years in April as imports of goods rebounded while exports of energy products declined, a trend that if sustained, could result in trade being a drag on economic growth in the second quarter.

China's exports shrank much faster than expected in May while imports extended declines with a grim outlook for global demand, especially from developed markets, raising doubts about the fragile economic recovery.

Japan's economy grew more than initially thought in January-March, revised data showed on Thursday, as a post-pandemic pickup in domestic spending and company restocking helped offset the hit to exports from slowing global demand.

China's biggest banks on Thursday said they have lowered interest rates on yuan deposits, in actions that could ease pressure on profit margins and reduce lending costs, providing some relief for the financial sector and wider economy.

The U.S. economy is strong amid robust consumer spending but some areas are slowing down, U.S. Treasury Secretary Janet Yellen said on Wednesday, adding that she expects continued progress in bringing inflation down over the next two years with a strong labor market.